In addition, the firm may not have the same financial pressures if they are managing their entire supply chain in the same currency. Increased competition is likely to result in lower sales.
Question 3 - Decreasing Level of National Income
If Thailand suffers a decrease in the level of national income this means that there will be less money in the economy as a whole, with less being earned. Where the level of money in the economy declines there will be a decline in the aggregate demand. The decline will not be evenly spread across all products; those which are essential will still be purchases, those which are not necessary will suffer a greater decline. As the Blades products are not an essential product there is likely to be a decline in the demand and a reduction in the revenue earned if Thailand suffers a decline in national income.
Question 4 - Deprecation of the Bhatt
As noted in question 1, if the Bhatt depreciates it becomes worth less; meaning it will take more Bhatt's to buy a Dollar. If Blades do not change the prices of their goods they will suffer a decrease in revenue when the currency is exchanged back to dollars. In this transaction it is Blades that is carrying the exchange rate risk. This is the reason Blades may be preferred over other...
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